Rule 57Q capital goods credit denied for storage tanks outside the covered categories despite captive use.

Modvat credit under Rule 57Q was confined to goods falling within the rule's definition of capital goods, or to components, parts, spares and accessories of capital goods already covered by it. Storage tanks manufactured and captively used by the assessee did not fall within that coverage, and Serial No. 5 of the table could not apply because the tanks were not goods specified in Serial Nos. 1 to 4. The Board circular did not extend entitlement where the goods themselves were outside the rule. Credit was therefore not admissible.

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Issues: Whether Modvat credit was admissible on storage tanks manufactured by the assessee and captively used, on the footing that they were capital goods or components/accessories eligible under Rule 57Q.

Analysis: The claim was examined with reference to Rule 57Q and the exemption notification governing captive clearances of capital goods. The storage tanks did not fall within the definition of capital goods under the rule as it then stood. Serial No. 5 of the table covered only components, parts, spares and accessories of goods already specified in Serial Nos. 1 to 4, and the tanks were not goods specified in those entries. The Board circular relied upon was also held inapplicable because it assisted only where the parts or components were used with capital goods falling within the rule and classifiable under the relevant chapter coverage. As the goods in question themselves were outside the rule, the circular did not confer entitlement.

Conclusion: Modvat credit on the storage tanks was not admissible and the assessee's claim failed.

Ratio Decidendi: Credit under Rule 57Q was available only to goods that satisfied the definition of capital goods, or to components, parts, spares and accessories of capital goods already covered by the rule; goods outside that coverage could not claim credit merely because they were captively used.

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